What is a Credit Score in the US? FICO vs VantageScore Explained
A credit score is a 3-digit number (300-850) summarising how likely you are to pay back borrowed money. Two major models dominate: FICO (used by 90% of lenders for major decisions) and VantageScore (shown on Credit Karma, Chase Credit Journey etc.).
The FICO buckets
- Payment history — 35%. On-time payments across credit cards, student loans, auto loans, mortgages.
- Amounts owed — 30%. Especially credit utilisation — % of your credit limit you're using.
- Length of credit history — 15%. Age of your oldest account + average age across all accounts.
- Credit mix — 10%. Do you have both revolving (cards) and installment (loans)?
- New credit — 10%. Hard inquiries in the last 12 months.
Score bands
| Score | Band | What you get | |---|---|---| | 800-850 | Exceptional | Best rates on everything | | 740-799 | Very good | Near-best rates | | 670-739 | Good | Standard rates | | 580-669 | Fair | Subprime rates, higher deposits | | 300-579 | Poor | Most credit denied |
What moves the score — fastest first
1. Pay credit card balances below 10% of limit before statement closes. Reports as low utilisation. +20-40 points in 30-45 days. 2. Become an authorised user on a family member's long-standing, well-managed card. Inherits their credit age. +10-30 points in 60 days. 3. Pay every bill on time, auto-pay the minimum at least. +5-10 points per month of perfect history. 4. Don't close old cards. Closing destroys credit age AND raises utilisation ratio. 5. Avoid hard inquiries — don't apply for multiple cards in one quarter.
What doesn't hurt your score
- Checking your own score (soft inquiry)
- Paying rent or utilities on time (unless you use a reporting service)
- Debit card spending
- Having money in savings
- Income or employment changes
Common mistakes
- Closing your oldest card after paying it off. Keep it open, put a small monthly subscription on it, auto-pay.
- Maxing a card for a big one-time purchase. Even if you pay it off the next day, the statement balance is what gets reported.
- Applying for a store card at checkout for 10% off. Hard inquiry + new account shortens credit age.
- Settling a debt for less than owed. Shows as "settled" — worse than current with late payments.
The big-money implication
A 740 vs 620 score on a $400,000 30-year mortgage = roughly 1.25% rate difference = about $95,000 extra interest over 30 years. Credit score is not a vanity metric; it is six figures of real money.
Pull your report free
AnnualCreditReport.com gives free weekly reports from Equifax, Experian, and TransUnion. Check for errors — 1 in 5 reports have material mistakes.
Use our Mortgage Calculator to see exactly how rate differences affect your monthly payment.
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